Company executives are always seeking ways to grow their businesses and increase profitability. Sometimes, brand-new products and services are needed to drive growth. Looking at improving existing products or services, however, is often the best approach.
Redesigning them, even with a minor change in materials, process or labor, can lower costs and improve quality, which can drive additional growth. It is desirable and often possible to find a win-win of enhanced product quality and higher profitability.
Cost reduction is a major goal
Product cost reduction by redesign means that a manufacturer changes one or more aspects of the product without changing its functionality — in a way that reduces production cost and hopefully offers other benefits. Most manufacturers should have an ongoing, formal cost reduction process in place, but they also need to be flexible to address new ideas as they arise.
For example, Adidas is currently redesigning a shoe to produce 50 percent less waste, reduce the number of parts by 50 percent and make greater use of recycled materials. The company’s level of technical innovation is considered exemplary, and the rest of us can learn a lot from Adidas’ experiences.
Companies such as Clark-Reliance are also striving to innovate, reduce costs and redesign products to lower costs and improve quality. The first steps are to infuse design improvement thinking into your company and build a product design culture that involves the appropriate employees from across the organization.
Neglecting to act can hurt
Often overlooked is the importance of understanding the costs of doing nothing, which can result in being priced out of the market, obsolescence and not being able to meet customer specifications.
Ideas should always be encouraged. We recommend making the process as visual as possible by including preliminary sketches and eventually a 3-D drawing. The hope is that even people outside the core team will have ideas to contribute.
If employees feel they are free to act on their ideas, you will cultivate an innovative, continuous-improvement culture in which change is not feared or delayed, but greeted with enthusiasm and optimism.
While exciting, redesign can be taxing in terms of time and resources to fully evaluate the options and make change happen. Before you start a redesign, be sure you have the resources, talent and commitment to see the process through to resolution.
We have identified four specific triggers for pursuing product redesign:
1. The cost of the product’s raw materials has increased significantly, so the product is losing some or all of its probability.
2. The competition has made improvements in technology or product performance.
3. There is so much competition that, if you are not continuously redesigning, you will fall behind.
4. Your market niche or market segment has changed.
It is a good idea to routinely review product offerings and look at the cost of material, labor and overhead. We pick a couple of products every quarter and keep looking at what we can do better or differently. Make it a common practice to look for cost-saving ideas through product redesign. ●
Matthew P. Figgie is chairman of Clark-Reliance, a global, multi-divisional manufacturing company with sales in over 80 countries, serving the power generation petroleum, refining and chemical processing industries. He is also chairman of Figgie Capital and the Figgie Foundation, a member of the University Hospitals Board of Directors, corporate co-chairman for the 2013 Five Star Sensation, and chairman of the National Kidney Walk.
Rick Solon is president and CEO of Clark-Reliance and has more than 35 years of experience in manufacturing and operating companies. He is also the chairman of the National Kidney Foundation Golf Outing.